Carlisle Companies Reports First Quarter Results
SYRACUSE, N.Y.--April 16, 2001--Carlisle Companies Incorporated Reports First Quarter Results.Carlisle Companies Incorporated reported first quarter sales of $463 million and a net loss for the quarter of $10.2 million or $0.33 per share (diluted). After factoring out the effect of a $24.0 million after-tax restructuring charge recorded in the quarter, net earnings from operations were $13.9 million, or $0.45 per share.
Sales for the quarter were up 7% over last year's first quarter sales of $434 million. Carlisle Tire & Wheel, Carlisle Process Systems, Tensolite and Carlisle SynTec led the Company in sales growth.
Net earnings before the restructuring charge were $13.9 million, or $0.45 per share versus $25.5 million, or $0.83 per share for the first quarter of 2000. The reduction in operating net earnings was caused by declining demand, particularly in the automotive and transportation industries. Aggressive pricing, as competitors seek to maintain volume and control inventories, and increased production costs unfavorably affected results.
Richmond McKinnish, Carlisle's President and CEO said, "Carlisle has been impacted by the manufacturing slowdown evidenced throughout the industry, especially in automotive and transportation markets. We have taken appropriate actions to reduce costs and eliminate marginal assets. Although this produces a loss in the short term, our competitive position is strong and we are confident that these actions will contribute to a leaner and improved Carlisle."
Carlisle is a diversified manufacturer of products serving construction materials, industrial components, automotive components and general industry markets.
CARLISLE COMPANIES INCORPORATED
March 31, 2001
FINANCIAL RESULTS
(In millions, except per share data)
2001 2000 % Change
First Quarter
Sales $ 463.2 $ 434.0 7%
Net Earnings $ (10.2) $ 25.5 -140%
Basic E.P.S. ($0.34) $0.84 -140%
Diluted E.P.S. ($0.33) $0.83 -140%
2001 SEGMENT FINANCIAL DATA
(In millions)
MARCH - QTR 2001
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EBIT
Sales EBIT % Sales
----- ---- -------
Construction Materials $ 91.8 $ 8.9 9.7%
Industrial Components 191.8 18.7 9.8%
Automotive Components 68.9 3.1 4.5%
General Industry /All Other 110.7 33 2.9%
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Subtotal 463.2 34.0 7.3%
Corporate/Elims - - (41.8) - -
---- ------
Total $ 463.2 $ (7.8) -1.7%
2000
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EBIT
Sales EBIT % Sales
----- ----- -------
Construction Materials $ 87.6 $ 8.9 10.2%
Industrial Components 163.0 24.5 15.0%
Automotive Components 83.4 7.2 8.6%
General Industry /All Other 100.0 8.6 8.6%
------ ----
Subtotal 434.0 49.2 11.3%
Corporate/Elims - - (3.5) - -
---- -----
Total $ 434.0 $ 45.7 10.5%
Discussion of Results Summary
Carlisle Companies Incorporated reported first quarter sales of $463 million and a net loss for the quarter of $10.2 million or $0.33 per share (diluted). After factoring out the effect of a $24.0 million after-tax restructuring charge recorded in the quarter, net earnings from operations were $13.9 million, or $0.45 per share.
Sales for the quarter were up 7% over last year's first quarter sales of $434 million. Carlisle Tire & Wheel, Carlisle Process Systems, Tensolite and Carlisle SynTec led the Company in sales growth.
Net earnings before the restructuring charge were $13.9 million, or $0.45 per share versus $25.5 million, or $0.83 per share for the first quarter of 2000. The reduction in net earnings was caused by continued decline in demand in many of our markets. Carlisle is experiencing the recessionary conditions that exist throughout the manufacturing community. Demand among the automotive and other industrial transportation industries has been especially soft. The weakness in demand has resulted in aggressive pricing as competitors seek to maintain volume and control inventories. Raw material and utility price pressures have increased our cost base. These conditions, coupled with the diminishing absorption of fixed costs due to lower production volumes, have affected our results unfavorably.
In the first quarter of 2001, the Company recorded a $24.0 million after tax, or $0.79 per share, restructuring charge to earnings. Our policy is to continually evaluate all of the businesses and markets in which we participate. Accordingly, we are consolidating and realigning facilities in order to improve future operating performance. The $24.0 million after tax restructuring charge is primarily (84%) composed of costs related to exiting and realigning facilities that have under performed in the automotive components and transportation businesses and are not forecasted to perform at our standard. Approximately $18.8 million after tax (78%) of the total charge is related to machinery, equipment, inventory and goodwill write-offs. The remainder of $5.2 million after tax represents anticipated cash expenses from involuntary employee terminations and other restructuring costs. It is intended that the actions required to exit and realign these operations will be completed within the next twelve months. The Company expects the future savings of reduced depreciation and employee expense to approximate $1.8 million, or $0.06 per share, on an annual basis. The subsequent discussion of operations by segment excludes the effect of the restructuring charge.
Construction Materials sales of $92 million for the first quarter were up 5% over 2000 first quarter sales of $88 million. Sales in the domestic roofing market rose over last year as a result of increased thermoplastic polyolefin (TPO) roofing membrane and insulation shipments. A portion of the first quarter increase can be attributed to the unusually slow December, which was the result of the harsh weather conditions experienced throughout the Northeast and Central Midwestern regions.
Operating earnings of $8.9 million for the Construction Materials segment were flat over the first quarter of 2000. Although sales were up, margins were down due to the effects of higher raw material costs. In addition, this segment's product mix included fast growing but lower margin TPO roofing membrane and insulation products.
Sales in the Automotive Components segment declined over the first quarter of 2000. Throughout the first quarter of 2001, assembly locations at each of the major domestic automotive OEM's experienced multiple weeks of production shutdowns. Automotive build requirements have fluctuated as the industry has moved aggressively to reduce vehicle inventories in face of uncertain demand.
Earnings in this segment were down 57% as compared to the first quarter of 2000, due to the reductions in production volumes this quarter.
Industrial Component sales of $192 million were up 18% over last year. This sales increase came principally from the acquisition of the Consumer Tire & Wheel Division of Titan International, which was acquired by Carlisle Tire & Wheel in April of 2000, offsetting some slowness in the core lawn and garden markets. Tensolite's sales were up for the quarter, as a result of its acquisition of UniTrek in July of 2000. In addition, in March of 2001, Tensolite acquired Connecting Devices, Inc., a designer and manufacturer of RF/microwave connectors and cable assemblies serving the wireless, Internet infrastructure and opto-electronic switch markets. Carlisle Motion Control and Carlisle Industrial Brake & Friction have seen softness in the heavy duty truck, and heavy construction and mining equipment markets, offsetting some slight improvement in aftermarket businesses.
Earnings in the Industrial Components segment were down 23% over last year, reflecting the impact of reduced volumes in Carlisle's core businesses and the impact of lower margins in acquired businesses.
General Industry sales of $111 million were up 11% over the first quarter of 2000. Carlisle Systems & Equipment led the segment in sales growth as a result of completed acquisitions. These sales gains were partially offset by the ongoing weakness in the transportation markets, particularly in the trailer markets of Carlisle Transportation Products and Johnson Truck Bodies. Carlisle FoodService's sales were up over last year as a result of the acquisition of Dura-Ware in February of 2000. Unfortunately, some of FoodService's other businesses have experienced softness, as consumer discretionary spending has decreased.
Acquisitions
Carlisle has completed five acquisitions in the first quarter of 2001: Stork Friesland B.V. and Siersema Sheffers B.V., both Dutch based designers and sellers of evaporators and spray dryers for milk powder processing; EcoStar, Inc, a provider of synthetic roofing tiles for the steep-slope roofing market; Wincanton Engineering Ltd., a UK based designer and manufacturer of processing equipment for the food, dairy, and beverage industries; and Connecting Devices, Inc., a designer and manufacturer of RF/microwave connectors and cable assemblies serving the wireless, Internet infrastructure and opto-electronic switch markets. Although acquisitions completed since the first quarter of 2000 contributed $51 million of sales revenue and no earnings in the first quarter of 2001, we are optimistic that the synergies that will come as well as the strategic development provided will result in attractive investments for the Carlisle shareholder.
Cash Flows
Cash flow from operations of $18.9 million was down $1.8 million from a year ago. This decrease was primarily the result of lower earnings recorded in the first quarter of 2001. Two factors principally impacted working capital. First, receivable collections slowed as an unusual number of our customers delayed payments. Second, inventory levels were up versus last year as a result of acquisitions completed in 2000 and early 2001. Additionally, we experienced a slower first quarter in our lawn and garden markets as compared to a strong first quarter in 2000. Action programs are in place to reduce working capital and improvement is expected in the second quarter.
Backlog
Backlog of $301 million as of March 31, 2001, was up 23% over March 2000 backlog of $246 million and up 13% over December 2000. Significant increases occurred at Tensolite and Carlisle Systems & Equipment, helped by acquisitions.
Overall
Carlisle has been impacted by the manufacturing slowdown evidenced throughout the industry, especially in automotive and transportation markets. We have taken appropriate actions to reduce costs and eliminate marginal assets. Although this produces a loss in the short term, our competitive position is strong and we are confident that these actions will contribute to a leaner and improved Carlisle.
CARLISLE COMPANIES INCORPORATED
Consolidated Statement of Earnings
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For the periods ended March 31,
(In thousands except per share data)
First Quarter
2001 2000 % Change
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Net sales $463,158 $434,018 6.7%
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Cost and expenses:
Cost of goods sold 378,546 336,527 12.5%
Selling and
administrative
expenses 51,512 48,922 5.3%
Research and
development expenses 4,004 4,092 -2.1%
Restructuring charges
and other 37,694 - 100.0%
Other (income) &
expense, net (842) (1,189) -100.0%
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Earnings before
interest & income
taxes (7,756) 45,666 -117.0%
Interest expense, net 8,214 5,179 58.6%
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Earnings before
income taxes (15,970) 40,487 -139.4%
Income taxes (5,781) 15,028 -138.5%
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Net earnings $ (10,189) $ 25,459 -140.0%
% of Net Sales -2.2% 5.9%
Basic earnings
per share ($0.34) $0.84 -140.0%
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Average shares
outstanding (000's)
- basic 30,258 30,191
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Diluted earnings
per share ($0.33) $0.83 -139.5%
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Average shares
outstanding (000's)
- diluted 30,512 30,526
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Dividends $6,047 $5,443
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Per share $0.20 $0.18 10.9%
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CARLISLE COMPANIES INCORPORATED
Comparative Balance Sheet
As of March 31,
(In thousands)
2001 2000
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Assets
Current Assets
Cash and cash equivalents $ 9,327 $ 3,624
Receivables 263,594 270,281
Inventories 275,267 231,040
Prepaid expenses and other 71,681 66,121
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Total current assets 619,869 571,066
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Property, plant and equipment, net 393,534 350,647
Other assets 355,472 193,631
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$ 1,368,875 $1,115,344
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Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt, including
current maturities $218,724 $2,472
Accounts payable 141,539 113,823
Accrued expenses 125,079 139,708
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Total current liabilities 485,342 256,003
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Long-term debt 282,297 281,379
Other liabilities 73,381 82,382
Shareholders' equity 527,855 495,580
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$ 1,368,875 $1,115,344
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CARLISLE COMPANIES INCORPORATED
Comparative Consolidated Statement of Cash Flows
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For the periods ended March 31,
(In thousands)
First Quarter
2001 2000
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Operating activities
Net earnings $ (10,189) $25,459
Reconciliation of net earnings to cash flows:
Loss on property, equipment & business 29,533 -
Depreciation and amortization 18,096 14,004
Working capital (14,766) (19,223)
Other (3,733) 547
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Net cash provided by operating activities 18,941 20,787
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Investing activities
Capital expenditures (21,015) (12,874)
Acquisitions, net of cash (37,935) (4,929)
Proceeds from sale of property,
equipment and business 6,374 -
Other (3,219) (3,265)
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Net cash used in investing activities (55,795) (21,068)
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Financing activities
Net change in short-term debt 44,962 483
Reductions of long-term debt (1,024) (365)
Dividends (6,047) (5,443)
Treasury shares and stock options, net (677) (1,187)
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Net cash provided by (used in)
financing activities 37,214 (6,512)
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Change in cash and cash equivalents 360 (6,793)
Cash and cash equivalents
Beginning of year 8,967 10,417
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End of year $ 9,327 $ 3,624
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